So, the idea here is to sell high vol FDs on things that I think are unlikely to hit.
The focus will be on earnings plays where things seem priced in already prior to the report, and trying to sell calls at the peak of pump and dumps. If you see any good opportunities for this strategy, feel free to post your trade here as well.
Do note that this strategy is inherently high risk as you are getting a lot of tail end risk if something totally unexpected happens.
To start this off:
Sold 18 FB 4/29 150P @ 3.62
I think that FB has basically priced in the worst possible scenario already, not to mention the fact that it’s trading at a 13 P/E which is a value stock. I’m expecting FB to disappoint again, but value stocks don’t dump 20%+ on an earnings report.
This is cool to read. Kindly share some screenshots every now and then for those of us who like seeing graphics at 16k resolution with anti-aliasing set to 32x.
Seriously, we need more education about selling options.
So AMZN is a loser. Im short 100 shares @ 2482 to offset the incoming assignment for a net loss of around 50 / share. AMZN’s a pretty shitty company so I do not want to baghold this. If I were assigned FB shares at 150, those I would’ve kept.
AMZN moving down 14% in a day from earnings is a tail end event, but tail end events do happen, especially in this market. The SPX knifing 150 pts obviously didn’t help the situation either.
BKNG up big as expected on any kind of beat, since they priced in a disaster already, which is why I only sold puts and not calls. This is one of my favorite types of plays, where a stock plunges/shoots up on a correlated stock’s earnings right before they report their own, which also happens to push volatility up. I was going to do the same on UBER but unfortunately they stole that from me by moving up their earnings for no reason.
ETSY looking good, they’re trading around 96 in after hours, and EBAY is around 51. Might close out ETSY/EBAY puts tomorrow to cut any potential losses on that side of the trade.
Sold 9 DASH 63P @ 2.77
8 NET 71P @ 2.26
100 FUBO 3P @ 0.06
Whatever terrible results these companies are going to report are priced in at this point. Will double down on all these positions if they continue to decline throughout the day.
Well, this was an awful week. This morning at 10AM basically every single trade blew up, as everything was down massively and the volatility levels exploded on top of that. I basically sold insurance against a tail end event, and said tail end event occurred. MTM loss at 10AM was roughly -60K
I paper handed most of the positions on the bounce around 10:30 as I was over leveraged and did not want to risk holding everything until EOD, especially with the propensity for the market to knife 1% in the last 5 minutes on Fridays, and with the heightened geopolitical risk weekend coming up before Russia’s victory day (this didn’t happen today, but there was definitely the risk). I basically entered Friday leveraged up 400-500% which I normally do, but I’m quickly realizing that is not appropriate for current market conditions. Going forward I’ll probably reduce the max leverage to 250-350%, and get in the habit of cutting trades frequently and early.
Summary for this week:
Premiums collected: 41,671
Payouts: 29,783
Total notional exposure: 1,409,700
PnL: 11,888 (84 basis points on notional)